POVERTY AND INCOME

DISTRIBUTION
 POVERTY IS A CONDITION IN WHICH A PERSON OR A FAMILY DOES NOT
HAVE THE MEANS TO SATISFY BASIC NEEDS FOR FOOD, CLOTHING, SHELTER,
AND TRANSPORTATION.
THE BIGGEST OBSTACLE FOR THE DEVELOPING WORLD
 KINDS O POVERTY

ABSOLUTE POVERTY RELATIVE POVERTY

• COMPLETE LACK OF THE MEANS NECESSARY • OCCURS WHEN A PERSON CANNOT MEET A
TO MEET BASIC PERSONAL NEEDS, SUCH MINIMUM LEVEL OF LIVING STANDARDS
AS FOOD, CLOTHING AND SHELTER.
 • SOCIO ECONOMIC STATUS
VICIOUS CIRCLE OF • LOTS OF YOUNG CHILDREN WERE EXPOSED TO EARLY

POVERTY AND CHILD LABOR

EQUALITY • LACK OF EDUCATION

• CHILDREN WHO ARE BORN INTO POOR HOUSEHOLD
WILL HAVE LESSER OPPORTUNITIES THAN THOSE IN
RICHER ONES TO COME TO SCHOOL

• JOB OPPORTUNITIES
• UNEMPLOYMENT-
 ISSUES ON POVERTY MEASUREMENT

• WHAT DOES AN INDIVIDUALS FIND “ACCEPTABLE” AND “MINIMAL”

• WHETHER WE MEASURE POVERTY ON HOUSEHOLD OR ON THE INDIVIDUAL LEVEL
• ISSUE ON THE DIFFERENCE IN THE NEEDS OF INDIVIDUAL HOUSEHOLD MEMBERS
 POVERTY MEASUREMENT

HEAD COUNT RATIO POVERTY GAP RATIO INCOME GAP RATIO

 POVERTY INCIDENCE IN THE PHILIPPINES

Poverty Incidence for the Poverty incidence for the

1 st Half Whole year
35 30
26.6 26.3
28.8 28.6 25.2
30 27.9 27.6 25
21.6
25
20
21
20
15
15

10
10

5
5

0 0
1 2 3 4 5 6 2006 2009 2012 2015 2018
FACTORS THAT HELPS IN THE DECREASE OF POVERTY
INCIDENCE IN THE PHILIPPINES

• ECONOMIC GROWTH
• GROWTH IN THE CONSTRUCTION AND MANUFACTURING SECTORS

• PROGRAMS
• PANTAWID PAMILYANG PILIPINO PROGRAM
 POVERTY THRESHOLD

• THE POVERTY THRESHOLD OR POVERTY LINE IS THE MINIMUM LEVEL OF

INCOME DEEMED ADEQUATE IN A GIVEN COUNTRY.
 POVERTY THRESHOLD
1st HALF
14,000

12,000 12,577
11,344
10,000

9,385
8,000
8,448

6,000 6,703

4,000

2,000

0
2006 2009 2012 2015 2018
 POVERTY THRESHOLD
WHOLE YEAR
25,000

20,000
21,753

18,935

15,000
16,871

13,352
10,000

5,000

0
2006 2009 2012 2015 2018
 BASIC PROPERTY OF INEQUALITY MEASUREMENT

• MEAN OR SCALE INDEPENDENCE

• POPULATION SIZE IS INDEPENDENCE
• PIGOU-DALTON TRANSFER SENSITIVITY
• DECOMPOSABILITY
•
GINI COEFFICIENT
•
 THE LORENZ CURVE
• A GRAPHICAL DISTRIBUTION OF WEALTH
DEVELOPED BY MAX LORENZ IN 1906.

• THE CURVE SHOWS THE PROPORTION OF

INCOME EARNED BY ANY GIVEN PERCENTAGE
OF THE POPULATION. THE LINE AT THE 45º
ANGLE SHOWS PERFECTLY EQUAL INCOME
DISTRIBUTION, WHILE THE OTHER LINE
SHOWS THE ACTUAL DISTRIBUTION OF
INCOME. THE FURTHER AWAY FROM THE
DIAGONAL, THE MORE UNEQUAL THE SIZE OF
THE DISTRIBUTION OF INCOME.
TRENDS IN POVERTY AND
INEQUALITY
 POVERTY AND INEQUALITY IN THE WORLD
POVERTY INEQUALITY
(HIGHER RATE TO LOWER RATE) (HIGHER RATE TO LOWER RATE)
• AFRICA • LATIN AMERICA
• ASIA • AFRICA
• LATIN AMERICA • ASIA
POVERTY IN ASIA
 SELECTED ECONOMIC ISSUES ON POVERTY

•
 SELECTED ECONOMIC ISSUES ON POVERTY

IS INEQUALITY A NECESSARY CONDITION FOR GROWTH?

 INEQUALITY IS UNAVOIDABLE

HOW DOES INEQUALITY RELATE TO OPENNESS

 HELPS TO MINIMIZE INEQUALITY
 ECONOMIC ISSUES ON POVERTY

1. ELASTICITY OF POVERTY TO CHANGES IN INCOME AND DISTRIBUTION OF INCOME

2. THE KUZNETS CURVE
3. IS INEQUALITY A NECESSARY CONDITION FOR GROWTH
4. HOW DOES INEQUALITY RELATE TO OPENNESS
 THE UNEQUAL BURDEN OF POVERTY

WHO ARE THE POOR

• RURAL DWELLERS
• WOMEN
• CHILDREN
• ELDERLY
• ETHNIC MINORITIES
 WHY ARE SOME PEOPLE POOR?

1. LOW STOCK OF HUMAN CAPITAL

2. VERY SMALL AMOUNT OF PHYSICAL CAPITAL
3. EMPLOYMENT OPPORTUNITIES MAYBE BLOCKED BECAUSE OF DISCRIMINATION
 COMPOSITION OF LABOR FORCE
45,000 IN THOUSANDS

40,000 40,534
38,741
37,600
35,000
35,061
32,636
30,000

25,000
25,267
23,406 22,849
20,000 21,404
20,013

15,000
15,267 15,335 14,751
13,657
12,622
10,000

5,000

0
2018 2015 2012 2009 2006
BOTH SEXES MEN WOMEN
 RURAL VS URBAN POVERTY

ASPECTS OF RURAL POVERTY ASPECTS OF URBAN POVERTY

• LACK OF OWNERSHIP OF PRODUCTIVE • UNEMPLOYMENT IN RURAL DRIVES PEOPLE
ASSET TO MIGRATE TO URBAN AREAS
• EDUCATION • LACK OF TRAININGS AND SKILLS
• LIMITED CAPACITY TO IMPROVE THEIR • UNEMPLOYMENT AND UNDEREMPLOYMENT
PRODUCTIVITY
 POVERTY AFFECTS ALL MARKETS

• CREDIT MARKET – LACK OF COLLATERAL

• GOODS MARKET – CANNOT BUY IN BULK
• LABOR MARKET – EMPLOYMENT OPPORTUNITIES ARE LIMITED
 ASPECTS OF LABOR ABSORPTION AND
UNEMPLOYMENT
• HIGH UNEMPLOYMENT RATE IN AREAS WHERE THERE IS A WIDESPREAD OF POVERTY
• LABOR MARKET DUALISM
• INDUSTRIALIZATION
• LABOR MARKET DISCRIMINATION
 GENERAL POLICY PRESCRIPTION

1. REMOVAL OF DISTORTION THAT STIMULATE CAPITAL INTENSIVE PRODUCTION

TECHNOLOGIES
2. REDISTRIBUTION OF ASSET IN THE FORM OF LAND - AGRICULTURAL EXTENSION
3. DEVELOPMENT OF HUMAN CAPITAL
4. IMPLEMENTATION OF PROGRESSIVE TAX SYSTEM
5. A PROGRAM TO INCREASE SUBSIDIARIES AND DIRECT TRANSFER TO THE POOR
 POLICIES TO ADDRESS RURAL POVERTY

POLICIES TO ADDRESS RURAL POLICIES TO ADDRESS URBAN

POVERTY POVERTY
• UPLIFT THE STATUS OF THE WOMEN • ACCELERATE ECONOMIC GROWTH
• RELAX TENANCY REGULATION
• PROVISION OF SOCIAL SERVICES
• CHECK RURAL CREDIT SCHEMES
• DEALING WITH SQUATTERS
• ENCOURAGE LABOR MIGRATION
• LAND USE
• PROVIDE RURAL INFRASTRUCTURE
• APPROPRIATE CURRENCY EXCHANGE RATES
• ESTABLISH PROPERTY RIGHTS